1. m a n a g e m e n t 2e H i t t / B l a c k / P o r t e r
Chapter 15:
Organizational Change and Development
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2. Learning Objectives
After studying this chapter, you should be able to:
Identify the internal and external forces for change in an organization
Discuss the focus of change, including strategy, structure, systems, technology, culture, and staff
Analyze the process managers should use in evaluating the need for change
Describe the process of organizational change

3. Learning Objectives
Explain common sources of resistance during the process of change
Discuss key approaches to overcoming such resistance
Outline the choices managers must make in managing change
Describe the most important elements involved in evaluating change outcomes

4. Learning Objectives
Describe three approaches to comprehensive organizational change and compare their similarities and differences

5. Fundamental Issues of Change
How much change is enough?
How fast should change take place?
How should the need for continual changes be balanced against the need for a minimum level of stability and continuity?
Who should be the major players in change processes, and what should their roles be?
Who, exactly, is likely to benefit and who could be harmed by particular changes?

6. Forces for Change Conditions Economic Legal/Political Developments
Technology
Developments
Managers’ visions, ideas, and actions
Employees’ suggestions and actions
Demographic Shifts
Social and
Competitors’
Actions
Adapted from Exhibit 15.1

7. Focus of Organizational Changes
Strategy
Structure
Focus
Systems
Technology
Shared values and culture
Staff
Adapted from Exhibit 15.2
Adapted from Exhibit 17.2: Forces of Organizational Changes

8. Examples of Focus of Changes
Strategy
Change from niche market to general market focus
Change focus from individual customer to large corporate customer
Structure
Change from a geographic to a customer structure
Implement an international division
Systems
Replace batch with continuous flow manufacturing
Change from last in/first out to first in/first out inventory valuation
Adapted from Exhibit 15.3
Adapted from Exhibit 17.3: Some Specific Examples of Focus of Changes

9. Examples of Focus of Changes
Technology
Update computer systems
Use holography in product design
Shared values
and Culture
Is implement diversity awareness program
Institute participatory decision making throughout organization
Staff
Encourage cooperation through cross-training program
Increase number and availability of training workshops for lower-level employees
Adapted from Exhibit 15.3
Adapted from Exhibit 17.3: Some Specific Examples of Focus of Changes

10. Recognizing the Need for Change
Proactive recognition
Effective managers recognize need for change at earliest possible time
Systematic monitoring of the environment
Reactive recognition
Not all change needs can be identified in advance
How and when to react rather than whether to react
Crisis recognition
Distinct threat to success of the organization and the manager

11. Relative Cost of Change
High
Crisis
Cost
Reactive
Proactive
Low
Early
Time when change is begun
Late
Low
Problem severity and immediacy
High
Adapted from Exhibit 15.4

12. Process of Change Change goes through three distinctive phases:
1. Unfreezing
2. Movement
3. Refreezing

13. Phase 1: Unfreezing Habits are strongly patterned ways of behaving
We can also have patterned ways of viewing and interpreting events
To change a patterned way of behaving or thinking, that pattern must be “unfrozen”
1. Unfreezing

14. Factors Causing Resistance to Unfreezing
Inertia
Being comfortable with the status quo
Mistrust
Of those communicating the need for change
Lack of information
About both the need for change and its effects
1. Unfreezing

15. Phase 2: Movement Major determinants of movement
Level of certainty or uncertainty associated with the change
Magnitude of the change
2. Movement

16. Factors Causing Resistance to Movement
Lack of clarity
If change is not clear, people will likely resist
Lack of capabilities
If people lack capabilities, they will probably resist
Lack of sufficient incentives
If negative consequences outweigh positive ones
2. Movement

17. Phase 3: Refreezing Habitual behaviors and perceptions are strong
Change may not be permanent
After a change is made, actions should be taken to prevent reversion to old patterns
Reinforce the change until it becomes more established
3. Refreezing

18. Factors Causing Resistance to Refreezing
Pull of past competencies
If previous actions were successful, people see little need for change
Non-immediate results
If results are slow, people will resist change
3. Refreezing

19. Forces for Failure Right thing Wrong thing Done well 3. Refreezing
1. Unfreezing
Done poorly
2. Movement
Adapted from Exhibit 15.5

20. Overcoming Resistance to Change
Create contrast to help
employees see differences
Provide training and
other tools
1. Unfreeze
2. Move
Celebrate early “wins” and
reinforce successful behavior
3. Refreeze

21. Dealing with Resistance to Change
Approach
Commonly Used in Situations
Advantages
Disadvantages
Negotiation and Agreement
In which someone or some group will clearly lose out in a change, and in which that group has considerable power to resist
Sometimes major resistance can be reduced or avoided
Can be expensive in many cases if it alerts other groups to want to negotiate too
Participation and Involvement
In which the initiators do not have all the information they need to design the change, and in which others have considerable power to resist
People who participate are more likely to be committed to implementing change, and any relevant information they have will be integrated into the change plan
Can be both time-consuming and awkward if participants design an inappropriate change
Adapted from Exhibit 15.6

22. Dealing with Resistance to Change (continued)
Approach
Commonly Used in Situations
Advantages
Disadvantages
Communication and Education
In which there is a lack of information or inaccurate information and analysis
Once persuaded, people will often help with the implementation of the change
Can be very time-consuming if many people are involved
Facilitation and Support
In which people are resisting because of problems in adjusting to the changes
No other approach works as well with problems of adapting to changes
Can be expensive, and still fail
Explicit and Implicit Coercion
In which speed is essential, and the change initiators possess considerable power
It is speedy and can overcome many kinds of resistance
Can be risky if it leaves people angry at the initiators and lowers trust in them
Adapted from Exhibit 15.6

23. The Change Process Planning and Preparation Implementation Evaluation
of outcomes
Dealing with
resistance to
change
Adapted from Exhibit 15.7

24. Planning Choices for Change
How soon is change needed?
Whose support will be critical for success?
Planning
Timing
How should the change be communicated?
Method
How can support for the change be developed?
Participation
Incentives
Adapted from Exhibit 15.8

25. Force Field Analysis Driving forces (examples)
Restraining forces (examples)
New technology
Cost of updating old
plant and equipment
Visionary leader
Employee groups
opposed to change
Pressure from managers for workers to implement new products
Norms that punish
risk taking
Equilibrium
Driving forces = Restraining forces
Adapted from Exhibit 15.9

26. Matrix of Agreeability and Influence
Potential
Key Supporter
(if numbers are large)
Most Important
Supporters
High
Agreeability
Low
Least Important
Supporters
Potential Key
Supporters
(if they listen to "most
important supporters")
Low High
Influence
Adapted from Exhibit 15.10

27. Implementation Choices
Technology
Shared values and culture
Strategy
Structure
Systems
Staff
Focus
Small
Moderate
Major
Amount
Implementation
Seldom
Often
Frequency
Slow
Rapid
Rate
Adapted from Exhibit 15.11

28. Evaluating Change Outcomes
Collect
data
Compare
outcomes
against
goals
Feedback
of results
Process
Type of data:
Quantitative
Qualitative
Amount
Cost
Timing
Goals, standards and benchmarks to be used in this step must have been set early on in process
To whom?
How?
Issues
Adapted from Exhibit 15.12

29. Organizational Development (OD) Approach to Change
Strong behavioral and people orientation
Emphasis on planned, strategic, long-range efforts
Focus on people and their interrelationships in organizations
Evolved from T-groups

30. Organizational Development (OD) Approach to Change
Values and assumptions
Basic approach to the process of change
Change agents
Interventions
Behavioral process orientation
Organizational renewal

31. Types of OD Interventions
Objective
Examples
Diagnostic Activities
To determine the current state of the organization or the parameters of a problem
Interviews
Questionnaires
Surveys
Meetings
Individual Enhancement Activities
To improve understanding of an relationships with others in the organization
Sensitivity training (T groups)
Behavior modeling
Life and career planning
Team Building
To improve team operation, abilities, cohesiveness
Diagnostic meetings
Role analysis
Responsibility charting
Intergroup Activities
To improve cooperation between groups
Intergroup team building
Adapted from Exhibit 15.13

32. Types of OD Interventions (cont.)
Objective
Examples
Techno-
structural or Structural Activities
To find solutions to problems through the application of technological and structural changes
Job enrichment
Management by objectives
New technology introduction
Process Consultation
To disseminate information concerning the future diagnosis and management of human processes in organizations including communication, leadership, problem solving and decision making, and intra- and intergroup relationships
Agenda setting
Feedback and observation
Coaching and counseling
Structural change suggestions
Adapted from Exhibit 15.13

33. Issues in Process Redesign
Objectives
Coverage
Potential Drawbacks
Reduce Costs
Shorten Cycle Times
Improve Quality
Breadth
Depth
Requires high level of persistence and involvement of top management
Effort may be greater than results
High chaos factor
High levels of resistance
Adapted from Exhibit 15.14

34. Process Redesign (Reengineering)
Fundamental redesign of business processes to achieve dramatic improvements
Technology driven
Most successful efforts have both breadth and depth (across units and core organizational elements)

35. Organizational Learning
Occurs in a organization that is skilled at
Creating, acquiring, and transferring knowledge,
Modifying its behavior to reflect new knowledge and insights
Factors that facilitate learning by organizations
Central, core competencies of current personnel
Organizational culture that supports continuous improvement
Organizational capabilities (such as managerial expertise) to implement necessary changes

36. Organizational Learning
Systematic, organized,and consistent approach to problem solving
Experimentation to obtain new knowledge
Drawing lessons from past experiences
Learning from the best practices and ideas of others
Benchmarking
Focus groups
Transferring and sharing knowledge

37. Top Ten Business Processes Being Benchmarked
Ranking
Information systems technology 1
Customer service satisfaction 2
Employee development training 3
Human resources 4
Benchmarking 5
Billing 6
Facility management 7
Process improvement management 8
Project management 9
Service 10
Adapted from Exhibit 15.15

38. Major U.S. Organizations Using Benchmarking
Business Process
Ranking
Xerox 1
TRW Automotive 2
U. S. Army 3
U. S. Department of Veterans Affairs 4
Saudi Aramco 5
C. S. C. 6
Dyn McDermott 7
The North Highland Company 8
Social Security Administration 9
Corning 10
Adapted from Exhibit 15.16